No SOX shelter for bouncing your boss

Here is today’s tip for a happy workplace: Don’t threaten to have police remove the company HR director, your superior, from a company-funded holiday lunch.

If you do deny admission to the festivities, don’t expect Sarbanes-Oxley to provide protective cover if you’re fired.

In Livingston v. Wyeth Inc.,a 4th Circuit case reported March 24, plaintiff Mark Livingston was a training director at Wyeth’s Sanford, N.C. facility. The company had agreed to overhaul staff training procedures for safe manufacturing practices after the FDA seized adulterated products from Wyeth plants in New York and Pennsylvania. Livingston had an ongoing dispute with Sanford plant management over its readiness to implement the new training and compliance procedures.

Livingston had butted heads with management before and the local HR director had placed him on a “personal improvement plan” with specific expectations for upgrading his performance. Livingston alleged the director began “stalking” him at staff meetings.

The conflict came to a head on Dec. 13, 2002, at an off-site company-funded holiday party when the HR director showed up to extend seasonal greetings. Livingston told the hapless HR guy (think “Toby” on “The Office”): “You’re not invited. We have a gift exchange. You have no gift. We have limited food.” Although there was some factual dispute about how the request to leave was phrased, it was undisputed that Livingston threatened to call the cops. Six days later he was fired.

Livingston sued the company under SOX’s whistleblower protections in 18 U.S.C. § 1514A, claiming he was fired because of his complaints about Wyeth’s inability to timely implement new training procedures.

The 4th Circuit affirmed summary judgment for Wyeth.

“[N]ot one link in Livingston’s imaginary chain of horribles was real or was in the process of becoming real,” wrote Judge Paul Niemeyer. Livingston’s prediction that delays in training would not allow for timely verification by internal compliance auditors proved wrong, and no reasonable employee in Livingston’s position could have believed these matters would be a violation of securities laws.

Not so fast, said dissenting Judge Blane Michael.

“Livingston formed a reasonable belief that Wyeth was intentionally failing to comply with a consent decree that arose out of regulatory action against Wyeth” by the FDA, Michael wrote. Company management threatened Livingston with termination unless he retracted critical statements and stopped reports of noncompliance at the Sanford facility. He made an internal complaint to the company’s ethics and regulatory compliance office, saying he was concerned about the effect of a cover-up on company shareholders.

That should have been enough to get Livingston past summary judgment, Michael said.